How Jet Blue Airways is striving for Success Jet Blue opens their 10-K/A with this sentence, “JetBlue Airways Corporation, or JetBlue, is a major low-cost passenger airline that provides high-quality customer service at low fares primarily on point-to-point routes.” http://www.sec.gov/Archives/edgar/data/1158463/000104746905005739/a2153142z10-ka.htm From the onset, they are expressing their overall goal of high-quality customer service and low costs. We will examine how Jet Blue achieves these goals through examining some of their financial statements. Strategy for Success Jet Blue’s strategy for success is to create a low cost passenger airline through customer service and a differentiated product. The company will rely on a controlled growth plan that focuses on their strengths, adding to the frequencies of flights, and going into new markets where they can beat the competition by price. They have management teams that work towards these initiatives by keeping operating costs low, giving customers distinctive flying experiences, concentrating on customer service, and by recognizing underserved and overpriced markets. Jet Blue gives its customers a different flying experience by offering leather seats, a personal television and XM radio. Combining that with superior customer service, they are creating an atmosphere that the customer would want to experience over and over again. And, it doesn’t hurt that the price is usually significantly less than the competition. Reduction of Risk Right now Jet Blue faces a high level of debt and fixed obligations. Some of the fixed obligations are the building and office leases and the purchases of the airplanes. They are leveraging more than some of their competitors and have less capital to work with. They also have floating interest rates which make for uncertain monthly payments in the future. Some controls that are in place to reduce these risks are multi-year warranties on the planes, having government insurance to cover acts of terrorism, and fuel hedging programs. Keeping a tight hold on these expenses and risks will be vital for Jet Blue. Unit-Level Activities The Unit-level activity for Jet Blue would be one flight. This flight will use a certain amount of fuel, and the cost of the crew will have to be considered. Jet Blue uses short turn around times for flights, thus keeping the employees working instead of paying them to do nothing. They also hedge fuel costs and give promos that benefit passengers from bringing on lots of luggage. And, through low prices, they try to fill each flight to capacity to maximize revenue. Batch-Level Activities A batch-level activity would be maintaining the airplanes. This cost is associated with all of the activities of Jet Blue. These activities are managed by having new aircraft and keeping long-term warranties on them. Another batch-level activity is the training of employees. This is incurred no matter how many flights are done. This activity is always done regardless of the amount of flights taken. Customer-Level and Organization-Sustaining Activity An easy customer-level activity would be advertisements directed toward the customer. Some examples would be the low cost fares or the on-board creature comforts like leather seats and personal televisions. An organization-sustaining activity would be the building and office rentals. The buildings are always needed to provide room for the aircrafts and offices for employees. Jet Blue has set for a very specific plan to achieve and sustain success in the passenger transport industry. They are focused on low fares, and customer service to attain these goals. If they continue to carry on as they are, they should be able to find this success.

References Noreen, E., Brewer, P., & Garrison, R. (2010). Managerial Accounting for Managers, 2nd Ed. New York: McGraw-Hill / Irwin.